We are finding that, all too often, taxpayers that make Employee Retention Tax Credit (ERTC) claims by engaging a so-called “ERTC Mill” are never told of their responsibility to amend their applicable prior year federal income tax return(s), and are shocked to learn that they owe additional taxes, penalties and interest. In order to offset their wage expense for the amount of the credit claimed, taxpayers who file an amended Form 941-X to claim an ERTC refund must simultaneously file an amended income tax return(s) for the tax year(s) in which the ERTC-eligible wages were paid. Because of the resulting lower salary expense, this results in a higher tax burden for taxpayers with sizable ERTC refunds. Reasonable Cause Penalty Relief To the extent an ERTC was retroactively claimed,...
